From Delinquency To An 800+ Credit Score: A Success Story
Molly Grace6-minute read
October 15, 2020
There was a time when Leslie Tayne would go to the store and, when asked if she wanted to open up a store card, she’d wryly warn the cashier, “You’re not going to give me a credit card.”
Her story begins, as it often does for many credit-deficient college-educated professionals, with student loan debt.
Americans are in a lot of debt. Consumer debt in the U.S. finally hit the $14 trillion mark in early 2019. Of the different types of financial commitments owed by consumers, student loan debt is surpassed only by mortgage debt, swallowing up both auto loans and credit card debt.
Since the amount and status of your debt can be a big factor in the determining of your credit score, many people who are in debt struggle with building a decent credit history. Student loan debt can make this especially difficult, since you’re combining large monthly payments with the typically lower salaries of those just starting in their careers.
Tayne, an attorney, was able to pay for undergrad on her own, but had to take out loans to afford law school. After graduating, she got married. Her husband controlled their shared finances, meaning she had almost nothing to her name. All the household income, including her own earnings, was deposited into her husband’s bank account. Even the car she drove wasn’t in her name.
“The only thing I had was my debt from law school,” Tayne said.
And that debt was poised to cause Tayne a lot of trouble. Her husband was in charge of their money, and he wasn’t paying her debt. Outstanding monthly payments stacked up, and eventually she found herself being sued by her lender.
She was able to negotiate a settlement, but the damage to her credit was done. She doesn’t know exactly how low her score got, but she knows she wasn’t able to get a credit card on her own.
A big part of her struggle, Tayne said, is that she was early on in her career and wasn’t earning a lot of money, which made it hard for her to keep up with her large monthly payments – $923.31 per month, at one point.
This can be a real struggle for graduates with professional degrees. Their degrees cost a lot to obtain, but when they’re first staring in their careers, they aren’t necessarily making the larger salaries associated with their fields. Tayne, for example, began her career in the public service sector, which, she said, isn’t necessarily an area that pays a lot.
Then, when Tayne’s kids were born, she had to stretch her tight budget even further.
“I had three children by the time I was 28 years old. A lot of my money was going to babysitting,” she said.
Eventually, Tayne divorced her husband. She slowly worked at chipping away her debt. Her credit score started to come up. She bought a house.
Finally, she got a call one day from her accountant, who informed her that she had, at long last, enough money to completely pay off the last of her loans. After 15 years, she made her final payment in 2012.
But Tayne wasn’t just focused on getting rid of her debt. She also wanted a healthy credit score
As her score rose, Tayne became more conscientious about keeping track of her credit. She entered into a credit monitoring program. Once her score was in the lower 700s, she decided she wanted to be one of those people who have a credit score over 800 points.
“It’s not really an easy feat,” she said.
Getting in the 800+ range takes a lot of work, and a lot of patience. Not many people can do it. According to the credit-reporting bureau Experian®, only 21% of credit holders in the U.S. have a credit score of 800 or above, and only 1.2% have a perfect, 850 score.
During our talk, I asked her what her score is today. She pulled it up. 815.
Today, Tayne owns her own debt resolution firm, helping others from all walks of life and income levels navigate the often-difficult task of taking control of their finances. To her clients, she preaches baby steps and finding a solution that works for them.
Here are some things she said are important to know for those who are trying to get their finances right.
Slow And Steady
“A lot of the advice we give people is to try to pay down debt faster, but that’s not always possible,” Tayne said. For her, “it took years and years and years, and it was frustrating.”
Be realistic about how long it will take you to reach your financial goals, whether it be paying off debt, improving your credit score or saving for a big goal.
Do What You Can
Often, the standard personal finance advice focuses on things that aren’t necessarily realistic for everyone.
Having cash reserves and being conservative with spending can help if you’re able to achieve those things, but “it’s very hard to be conservative in spending when you have three little children. They don’t have wants, they have needs. It’s not discretionary spending,” she said.
Look at what options are available to you that could help alleviate your difficulties. For student loans, this could mean forbearance, deferment or setting up an income-based repayment plan.
Tayne also said that during her period of debt repayment, she worked hard at putting her head down and focusing on her career. Building your career, especially if you’re still fairly new to the workforce, can help you boost your overall earning potential, which can make your debts or other financial hardships easier to bear.
“Baby steps,” Tayne emphasized.
Big, lofty goals like paying off all your debt can end up preventing you from getting anywhere at all. You can get discouraged by how little progress you’ve made relative to the largeness of your objective.
Instead, Tayne advised creating “small, baby goals” for yourself. “Don’t keep looking at that large number,” she said.
Tayne said that your first goal with tackling debt, if you’re behind on payments, should simply be to catch up and get current on your loans. Then, stay on top of it. Get in the habit of making regular, full payments. After that, maybe start making some extra payments.
“Each time you get to a new level, you get closer,” she said.
Have Your Own Lifeboat
Tayne laments how reliant she was on her husband when they were married.
“Credit is so important as an individual, and you never know when you’re going to need to rely on yourself,” she said.
Life is long and unpredictable. Taking charge of your own personal finances, even if you currently don’t have a pressing need to, will likely end up paying off (literally) in the long run.
Plan With Your Unique Circumstances In Mind
“Your circumstances are different from everyone else’s,” Tayne said.
Try to discern what led up to you taking on debt, and what your specific challenge is going forward. Tayne tries to cover this with her clients so that she can work with them to build a smart strategy for their individual financial goals.
“Just because something works for someone else doesn’t mean it’s ideal for you,” she said
Get Some (Self) Help
According to Tayne, debt resolution isn’t all about the numbers. There’s a big psychological piece to debt that has to be understood to be able to work through it.
First, she said, don’t be too hard on yourself.
“Don’t beat yourself up. You’re not alone,” she said.
She advised looking at the debt as a temporary setback and ask what you can do to help yourself. Educate yourself about the problem.
Find Someone Who Has Your Back
Bring in a partner, such as a debt professional, who can help you and who you feel understands what you’re going through.
Tayne said that the lessons she’s learned from her own debt journey help her build trust and empathy with her clients, and emphasized how important it is for individuals who are struggling to get help from someone who understands.
“I know what it’s like to have student loans, I know what it’s like to face insurmountable goals,” she said. “I’ve been divorced, I’ve raised children on my own. I understand those challenges.”
Sometimes, the first step is as simple as knowing where you’re at. To find out, sign up today with Rocket HomesSM to get your free credit score and start mapping out your own financial goals. You can also check out our other resources for more information on buying a home or reviewing your personal finances.
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